F&O Trading Cost After the STT Hike: What Traders Pay

SEBI's study for FY26 found that 87.7% of individual equity derivatives traders ended the year with net losses after costs, and the average loss per trader was about Rs 1.17 lakh. Many families following the f&o trading cost after the STT hike are now discussing these figures first, and the data covers about 90% of the individual traders in the segment.

The number of traders is also lower than before. As per SEBI, individual participation fell by 18% to 87.5 lakh in FY26, and the aggregate net loss of these individuals decreased by about 18% to Rs 91,685 crore.

A year earlier, the position was worse. The loss rate for FY25 was 90.9%, and SEBI's revised figure for the net loss of individuals in that year was Rs 1,11,788 crore. So the share of losing traders has come down by a little more than 3 percentage points, but it remains very high.

Most of these traders are buying options. Data from the SEBI study, as summarised by K G Somani & Co LLP, shows that about 97% of the traders mainly bought options and this is the segment where the bulk of the loss is recorded.

Individuals who trade in futures and options are now looking at their monthly contract notes with more attention. Earlier, many of them looked mainly at the profit or loss on the trade itself. Now the small deductions on every contract note are being noticed, since the securities transaction tax (STT) is charged each time a trade is executed, whether the trade ends in profit or in loss.

The loss figures given by SEBI are net figures which means they are calculated after the costs of trading have been deducted. For an individual who trades several times in a month, there will be deductions on every order and the total of these amounts will keep increasing over the twelve months of the year.

Traders are now asking how much each trade will cost them after the changes in STT. The rates have been revised twice in less than two years, first in October 2024 and again in the Union Budget of February 2026. Before the SEBI data on costs and losses is looked at in more detail, it is necessary to see what the current rates are and how they work on a normal trade.

How the STT rates changed since 2024

The first revision came in October 2024. At that time, the STT on futures was increased from 0.0125% to 0.02%, and the STT on options premium was increased from 0.0625% to 0.1%.

The second revision was announced in the Budget on 1 February 2026 and applied from April 2026. The STT on futures was raised from 0.02% to 0.05%, and it is charged only on the sell side. The STT on options premium was raised from 0.1% to 0.15%, while the STT on exercised options was raised from 0.125% to 0.15%.

In percentage terms, the futures STT has increased by 150% and the options premium STT has increased by 50%. The STT on equity delivery, intraday equity and commodity derivatives was not changed, so the increase is limited to equity futures and options.

The effect on a single trade can be seen from the examples worked out by Multibagg. For a Nifty futures contract of Rs 2,00,000, the STT has been hiked from Rs 40 to Rs 100, an additional Rs 60 on one lot. In the case of options, when premium of Rs 10,000 is sold, the STT has been increased from Rs 10 to Rs 15.

The individual traders who place many orders in a month will find these amounts on each of their contract notes, and the deduction will be made again whenever a position is closed.

There is a difference in the way the revised rates have been applied to the various products. The percentage increase is larger in futures, whereas options which are used by most of the individual traders, have been given a smaller increase that will be charged on a much larger number of orders. The STT on delivery based equity trades, intraday equity trades and commodity derivatives has been kept at the earlier rate, and the traders in these segments will find no change in their contract notes.

For trader who sells options, the STT is calculated on the premium received and not on the size of the contract. When a position is closed by selling the option, the tax is charged on the amount of premium that comes in on that sale.

Futures work differently, as the tax is calculated on the full value of the contract. For an individual selling futures worth Rs 10 lakh, there will be an increase of around Rs 300 in the STT paid on that single sale. The buy side of same futures trade does not carry this tax.

The tax is deducted on the day of the trade, irrespective of whether the position closes at a profit or at a loss. Individuals who trade only few times in a year and those who trade every week are charged at the same rate, so the total paid in a year depends on the number of sell orders placed.

Many traders are now adding up these deductions across a full month of orders, and some are comparing the totals with their net profit or loss for same month.

Where costs turn losses into bigger losses

The SEBI data, as summarised by Finnovate, shows that 82.1% of individual traders had lost money in FY26 even before costs were counted. After the costs were deducted, the share of losing traders rose to 87.7%. The difference between the two figures is a group of traders who were not making a gain on their trades, but whose results moved from a small loss or a small profit into a clear loss once the charges were taken into account.

It is this group that the contract notes are now showing in numbers. Trader whose trades were close to break even before costs will find that the deductions on every order decide the result for the year. STT is one of these deductions, and it is charged on each trade, whether the position gains or loses.

However, the data does not allow anyone to say that STT alone has caused the rise from 82.1% to 87.7%. SEBI's study speaks of costs as a whole and does not separate the share of each charge. The study also does not say how much of the movement is due to the rate changes of the last two years and how much is due to the number of orders placed by traders.

The place where these losses sit is clear from the study. Options accounted for about 92% of the aggregate losses in FY26, as per K G Somani & Co LLP, which has summarised the findings. The firm also reports that about 97% of the traders mainly bought options, and the average loss per trader was around Rs 1.17 lakh.

Trader who buys an option pays the premium at the start, and the whole of that amount is lost if the option expires without value. Costs are then added on top of such a loss. In the case of a trade that gains a little, the deductions can reduce the gain further, and some individuals are finding that the final figure in their statement is lower than the figure they had expected from the trade.

Over a longer period, the amounts become larger. Finnovate reports that individual traders lost roughly Rs 2.03 lakh crore in equity derivatives over FY25 and FY26 combined. This covers two full years, and it includes the period before the Budget 2026 changes came into effect, as those rates applied only from April 2026.

For that reason, the full effect of the higher STT rates is not yet seen in the SEBI figures. The FY26 study covers a year that ended in March 2026, while the new futures and options rates started from April 2026. The data for the first full year under these rates will be available only when SEBI publishes its next study.

Alongside this, families with an individual trading in options are checking the yearly totals of charges in their broker statements. Many of them are comparing these totals with the net loss shown for the year, and the two figures are being read together for the first time.

What can be said about 2027

No change in the STT rates for 2027 had been announced as of September 2026. The cost picture for the coming year therefore rests on the rates that came into effect in April 2026, and individuals which trade in futures and options are working with the same rates when they plan their trades.

Alongside this, some investors which do not trade directly are also affected by the higher futures STT. Arbitrage funds take positions in the cash market and the futures market at the same time, and they pay STT on the futures leg. According to market experts quoted by Business Standard, the higher futures STT reduces the spread of these funds by about 0.03% per transaction, which comes to roughly 0.3% to 0.5% a year on the net asset value (NAV).

Families who hold arbitrage funds for short term parking of money are now reading this figure along with the returns shown in their statements. The experts have not given any separate estimate for individual funds and the amount will be different for each scheme.

The total cost of a single F&O trade has more parts than STT. Exchange transaction charges, GST on those charges and on brokerage, stamp duty and the brokerage itself are also deducted on the contract note. A full total of the cost per trade is therefore not given here, and only the STT portion has been calculated.

Same limit applies to the SEBI figures. The FY26 loss data has been calculated after deducting all costs, and the study does not mention the share of each charge, so the effect of STT cannot be separated from the other charges.

Individual traders will have a clearer view when SEBI publishes its next study which will cover the first full year under the April 2026 rates. Any change to STT in a future Union Budget will also alter the cost on every contract note, and these two events are the ones that traders and fund investors will be watching.